Don’t be mesmerized by Amazon, warns Dixons Carphone boss

Boss of Dixons Carphone has told retailers not to be mesmerized by the “fresh and shiny” pureplay e-tailers, like Amazon. He advised retailers to think about how they differ from pureplays and to use their bricks and mortar propositions to their advantage.

“We think a lot Amazon as you can imagine,” said Seb James, CEO of Dixons Carphone. “It’s easy to get mesmerized like a mongoose and a snake about a new entrant which is so fresh and shiny and has advantages like lower costs, but where do we have structural advantages we can exploit?”

Speaking at Shoptalk Europe, James described how Dixons Carphone has a 27% share of the UK technology and white goods market, which is three times more than Amazon’s 8% share.

Pointing to this gap in market share, he said: “After 21 years with this apparently revolutionary and much-different business model, it’s not bad, but it’s not that great.”

James explained that he believes Dixons has the upper hand because of the face-to-face conversations it has with customers every day. This allows the retailer to do something Amazon can’t – up-sell and cross-sell products.

According to James, 90% of customers who are buying a big-ticket item like a TV, fridge or a computer will spend part of their shopping journey in the store, and 50% of customers who come in to buy their products will trade up to a better model after speaking to an store assistant. Meanwhile, 40% of customers will buy other products such as a soundbar for their TV after being shown demos from in-store staff and that’s all before they are offered services such as warranty, installation, delivery and set-up.

“It’s a structural advantage compared to pureplays,” he said. “It’s interesting, it means you focus your whole business on the conversation and the quality of that conversation and the upsell and cross-sell for that customer.”

He added: “It helps us compete with Amazon and helps us kill off our competition – and I know it sounds unkind, but I really like our competition dead.”

He said Dixons needs to become more savvy in the way it talks to new customers – the generation X, Y and Z who are beginning to become consumers of the products Dixons sells.

“We meet customers when they set up a home, when they’re more mature and on the employment ladder,” he said. “But there’s an opportunity to be much clearer with customers we meet for the first time to benefit from the lifetime [value] of the customer, and other people are ahead of us on this.”

James said Dixons regards itself as a really good transaction retailer, where if a customer wants to buy a TV they come in store or online, but James wants to begin building a relationship with the customer before and after the transaction.

He said the retailer needs to better understand the use case and the long-term objective to buying a product: “Nobody wants to own a washing machine, it’s the world’s most boring object, what we want is clean clothes," he said.

Earlier this year, James shared his vision to create a monthly subscription service in response to changing consumer behaviour, influenced by technology disruptors such as Uber and Airbnb which have led to a trend in the industry called the sharing economy